Report on Quality of Treating Physician Reports and Cost-Benefit of
Presumption in Favor of the Treating Physician

Prepared for the Commission on Health and Safety

and Workers Compensation

Frank Neuhauser, Survey Research Center

University of California at Berkeley

Executive Summary:

The 1993 reforms made a number of significant changes to the
medical-legal reporting process. These changes included requiring that the primary
treating physician (PTP) or the physicians designee "render opinions on all
medical issues necessary to determine eligibility for compensation" (LC 4061.5). When
additional medical reports are obtained for assessment of permanent disability, permanent
and stationary status, medical eligibility for vocational rehabilitation, medical
treatment, and the existence of new and further disability, the findings of the treating
physician are presumed to be correct (LC 4062.9). These legislative changes had the effect
of reintroducing the importance of the treating physician that had been curtailed by the
1989 reforms and adding the additional authority of rebuttable presumption.

Numerous parties have challenged the value of the change in the
treating physician role and particularly the presumption given to the reports. These
complaints generally involve 1) a perception of the low quality of the treating
physicians reports and 2) the problem of poor quality reports being given special
authority. Many observers feel that presumption has led to problems with "doctor
shopping" by the party with medical control and increased litigation.

However, quality is only one consideration. The legislation in part
meant to reduce the frequency of medical reports by reducing the incentive of any party to
request a report from a second (or third) forensic physician. Since the original report by
the treating physician is presumed correct, it is less likely that a second report will
prevail in a dispute and hence less likely that one will be requested.

The Commission on Health and Safety and Workers Compensation
undertook an effort to evaluate the quality of treating physician reports and the
cost-benefit of the PTP presumption under 4062.9. The preliminary results of this effort
find:

Treating physician reports are of substantially poorer quality than reports by Agreed
Medical Evaluators (AMEs) and Qualified Medical Evaluators (QMEs) writing reports for the
applicant or defense side or as QMEs selected from a panel by an unrepresented worker.

Of PTPs whose reports are submitted to the WCAB most are also QMEs

Most of the problems with PTP reports are on those reports where the PTP is not also
designated as a QME by the Industrial Medical Council.

The application of presumption to the PTPs reports has not reduced the number of
reports requested by parties on permanent disability claims at insured employers.

In short, changes to the status of the PTP made during the 1993 reforms
have resulted in medical-legal decisions based on poorer quality reports without any
apparent cost savings. In addition, there is consensus within the WCQB that presumption
has increased litigation and curtailed the discretion of Workers Compensation Judges
to craft reasonable decisions within the range of evidence.

In view of these findings the preliminary recommendation is to curtail
the presumption given to the findings of the primary treating physician. This could
involve elimination of the special authority given to the PTP or at least the use of some
lower legal standard granting the reports "great weight" but not presumption.

In response to several comments on the draft of this report it should
be noted that the Commission did not find reason to nor does it recommend reducing the
role of the PTP in case management and reporting under Labor Code 4061.5

These findings include several important caveats. First, the sample
includes only approximately four hundred reports drawn from four WCAB offices. Second, the
reports were drawn from claims with dates of injury in 1994 and 1995 on which the claim
closed before the end of 1997. The quality of PTP reports may have improved as physicians
became more knowledgeable about the requirements for reporting. Third, the data on the
cost and frequency of medical-legal reports are for insured employers only and cover dates
of injury through 1995 and medical legal reports submitted prior to the second quarter of
1998. Again, conditions could have changed in subsequent injury years and reporting
periods. Finally, the quality of reports discussed here refers to completeness and
ratability as measured by standards set for QME reports. A report could be less complete
or less clear but in actual application these problems may be outweighed by other
benefits. For example, the opinion may still be more informed, resulting in a more
accurate or less biased rating.

The data for this report are derived from two sources. Approximately four hundred
randomly selected files were drawn from four WCAB offices (Fresno, Oakland, Los Angeles,
and San Francisco). The files were randomly selected by computer from all claims filed
with the WCAB, with dates of injury in 1994 and 1995, and that closed prior to November of
1997. Some files and reports were subsequently deleted from the study because the file
contained no medical-legal reports or the issue in dispute was not covered under Labor
Codes 4061 or 4062.

For each file, all medical-legal reports were selected and coded according to physician
status (treating physician, QME from a panel, AME, and applicant or defense QME). In
addition, the qualification of the treating physician as a QME was checked against a
database of QMEs supplied by the IMC and covering the period under study. As a result, the
physician category PTP could be further divided according to whether or not a
doctor was also concurrently registered with the IMC as a QME.

The Disability Evaluation Unit (DEU) evaluated each report against a subset of the
criteria used by the Industrial Medical Council (IMC) for evaluation of QME reports and
additional criteria. These criteria were selected in consultation with several raters, the
manager of the DEU, and the IMC. The criteria selected are included in Appendix 1.

Data for estimating cost and frequency of medical-legal evaluations were obtained from
the Workers Compensation Insurance Rating Bureau (WCIRB). The Rating Bureau conducts
an annual survey of permanent disability claims. This survey includes data on each
medical-legal report for each claim in the survey sample. The data cover the cost, date of
service, and the party requesting the evaluation.

Data from the survey are available on approximately 3,000-3,500 claims for each
calendar year starting in 1989 and currently available through injury year 1995. As claims
mature the average number of reports per claim increases. Because the 1995 injury claim
data was only available through April 1998, all survey data were standardized with
evaluation at 28 months after the beginning of the calendar year in which the injury
occurred.

The 1993 reforms reintroduced the role of the primary treating physician requiring that
the physician address the permanent and stationary status of the injured worker, level of
permanent impairment, eligibility for vocational rehabilitation, and the need for future
medical treatment. The reforms also made the findings of the PTP presumptively correct
when an additional report was obtained covering these issues.

This presents a threshold requirement against which any party must assess the value of
obtaining an additional report. To be of value, an additional report must be expected to
result in findings that will improve the requesting partys case AND must also be
expected to rebut the presumption offered to the findings of the PTP. The expectation was
that this would reduce the number of reports requested especially by defense. The defense
faces the direct and indirect costs of obtaining a second report. The applicant side faces
the indirect costs and under some circumstances the direct cost.

A decline in reports will be reflected in two measures. First, with fewer reports
requested, the average number of reports per claim will decline. In addition, the
expectation is that the number of claims with no reports paid under the medical-legal fee
schedule will increase. However, once one side in a represented case opts for a
medical-legal report, the threshold faced by the other side is lowered. When both sides
obtain medical-legal reports, the PTP report no longer controls.

After the reintroduction of the treating physician role, numerous observers commented
on the perceived lack of quality of these reports. The contention was that PTPs were
generally unqualified (and some said unwilling) to determine medical-legal issues formerly
determined by forensic physicians. However, this contention ignored the possibility that
many treating physicians were likely to be capable, even highly qualified, to make these
determinations. Many treating physicians, particularly those operating in industrial
medicine clinics or similar operations, were likely to also be Qualified Medical
Evaluators.

In addition, while the quality of these reports was called into question by most
observers, the IMC had also found numerous problems with reports submitted by QMEs.
Consequently, the quality of these reports was judged not against a standard (which is
appropriate for the IMCs evaluation of QME reports) but rather against the quality
of reports submitted by doctors other than the PTPs. Moreover, the most appropriate
comparison is to evaluate the PTP reports against those reports written by Panel QMEs in
unrepresented cases and applicant and defense QMEs in represented cases. The expectation
was that AME reports would be of high quality.

The data on the distribution of the reporting physician is drawn from the files sampled
from the WCAB. Again, these data are from a sample of limited size and of claims with
injury dates in 1994 and 1995 that closed by late 1997. Therefore, the distribution of
applicant and defense reports is likely to underestimate the true frequency of these
reports. This is likely to be the case if represented claims, at least those with
competing medical-legal reports, are less likely to close within the first 18-30 months
after injury. A number of claims, as expected, include more than one report (for example,
a treating physician report and a Panel QME, a treating physician report and a applicant
or defense QME, or an applicant and defense report).

As shown in Chart 1, 39% of reports were by treating physicians (63% of claims included
a PTP report). 25% of reports were applicant or defense QME reports (41% of claims). 24%
of reports were by Agreed Medical Evaluators (39% of claims) and 13% were QMEs drawn from
a panel by an unrepresented worker.

Of more importance to this discussion is the following chart showing the portion of
primary treating physicians who were also QMEs at the time that they submitted the PTP
report. In this sample, nearly 60% of PTPs were also qualified medical evaluators
registered by the IMC.

This distribution is of considerable importance for evaluating the quality of PTP
reports. First, the higher the proportion of PTP reports written by physicians who were
also QMEs the higher the expectations for the quality of these reports relative to reports
by doctors acting as QMEs. The proportion of QMEs among reporting PTPs is high, but
consistent with expectations that medical treatment of serious occupational injuries is
concentrated among a subset of physicians experienced with occupational injuries.
One-third of these claims did not include a PTP report either because an AME was selected
or applicant and defense both selected QMEs. Among these claims, it is possible that the
portion of treating physicians who are QMEs was lower.

If the quality of PTP reports is lower than that of other forensic reports, this may be
the result of factors other than the ability and knowledge of the reporting physician. PTP
reports are often paid under the medical fee schedule, and when paid under the
medical-legal fee schedule, are paid at a discount to other forensic reports. In addition,
these reports were issued in the course of treatment, and consequently may consistently
overlook issues that were addressed in previous reports issued earlier in treatment. For
example, the history of the injury is part of a complete medical-legal report. However,
the treating physician may overlook this when issuing a report, assuming that it was
sufficient to cover the history in earlier reports.

The existence of PTPs who are also QMEs offered this evaluation an opportunity to
assess the issue of the knowledge and training of the PTP separate from the possible
impact of reporting on forensic issues in the course of treatment. If the quality of
reports was affected solely by the treating environment, the reports by QME and non-QME
PTPs would show similar quality characteristics. Consequently the following charts break
out treating physicians separately according to their status as QMEs.

The following several charts exhibit the findings on the quality of reports by each
physician type. The data shown cover the main criteria assessed in the evaluation. For
each criterion, the measure is whether the information was reported in a manner considered
acceptable for rating and settling indemnity and future medical issues. For each report,
each criterion was rated acceptable or not acceptable. Therefore, a mark of 50% means that
half of the reports by that physician type failed to adequately report on the issue. A
mark of 85% means 15% or reports were inadequate on the issue.

Charts 3 and 4 indicate that the quality of reports by treating physicians on five of
these six issues was lower than those by other types of reporting doctors. For four of the
six issues (not including diagnosis and P&S status) the differences were substantial.
In general, the report quality of PTPs exhibits only limited differences depending upon
whether the PTP was a QME or not. This suggests that across this range of issues, much of
the problem may be in the nature of the reporting process rather than the knowledge of the
reporting physician. This is consistent with these criteria (other than P&S status)
which are likely to have been reported on earlier in the treatment process. However, the
reports are of consistently lower quality and the non-QME PTPs are consistently inferior
to all other groups.

Charts 5 and 6 indicate problems with the quality of PTP reports that likely arises out
of insufficient knowledge or preparation. On these five critical issues, the poor quality
of PTP reports is driven almost completely by the quality of reports by non-QME PTPs.
These issues are central to the P&S report and less likely to have been the subject of
earlier reports. Consistent with this, the data show little distinction between the
quality of reports by PTPs who are QMEs and other QMEs reporting in the role of forensic
physician. However, reports by non-QME PTPs were inadequate on four out of five of these
issues a significantly greater portion of the time.

The issue of report quality is often summed up by whether a report is
"unratable." In practice, this is a poor measure. At least in current practice,
reports, even when of poor quality, are rated for purposes of determining issues of
permanent disability. The practice of the DEU is to rate reports, even poor quality
reports, and qualify the rating with comments. Consequently, for purposes of this study,
the DEU was asked to evaluate the reports against three standards. Was a report ratable
without qualification? Was it ratable but the rating would have been qualified? Or was a
report unratable?

The results of this portion of the evaluation are exhibited in chart 7. Across all
reports, approximately 40% were considered subject to qualification or unratable, with AME
reports exhibiting substantially higher quality. Consistent with the earlier charts
showing problems with the quality of treating physician reports, the PTP reports were of
significantly lower quality. Again, this problem was driven entirely by the ratability of
reports by PTPs who were not QMEs. The quality of reports by QMEs acting as PTPs was
indistinguishable from other types of reporting physicians on this criterion.

In summary, the quality of treating physician reports is consistently below reports by
physicians acting in a forensic role. For some of these problems, the prescription is
likely to involve informing treating physicians of the need to report on issues in the
P&S report even if these issues were covered in earlier reports. However, for a range
of issues the problem appears to involve a lack of understanding or training on these
important areas. This suggests a more complicated and costly education process would be
necessary to bring non-QME PTPs up to the level of forensic doctors.

The Industrial Medical Council has actively sought to educate treating physicians on
the requirements of medical-legal reporting. However, these efforts may have trouble
resolving the problems exhibited in the above data. None of the PTPs who were not QMEs had
more than a single report in the sample. Many of the QMEs reported on multiple claims (up
to six) within the sample. This was a small sample and QMEs could act as PTPs and forensic
doctors. But the implication is that individual PTPs who are not QMEs report only
infrequently on serious occupational injuries. Educational effort will be less successful
to the extent that the target audience is large (all PTPs) and marginally interested
(write few reports).

These data do make it clear that the reporting by PTP is affected by their role as PTP
and just by their knowledge and qualification as forensic specialist. For these issues
(charts 3 and 4) notification of the PTP about reporting requirements near the time the
worker is expected to reach P&S status is likely to improve the reporting
substantially.

In view of the apparent poor quality of many PTP reports, a second issue is important:
Are the savings from the special role afforded the PTP in the 1993 reform legislation
sufficient to balance the problems described above?

As noted earlier, the requirement that the primary treating physician report on the
several issues covered in LC 4061 and LC 4062 coupled with the presumption afforded the
PTP that these findings are correct was expected to reduce the frequency of medical-legal
reports and consequently the total cost of these reports. Early data on post-reform claims
showed promising trends in the frequency of claims with no medical legal reports and
reductions in the average number of reports per claim and costs per report.

However, more mature data and larger samples available on the two most recent PD
Surveys conducted by the WCIRB put in considerable doubt the early conclusions about the
impact of the changes in the treating physician status on frequency and costs. The trends
in cost per report appear to be driven almost entirely by the changes in the medical-legal
fee schedule. At the same time, the trends in the frequency of reports preceded the
reforms by at least a year, suggesting the cause of the improvement was driven by forces
other than the 1993 reforms.

Chart 8 shows the average number of medical-legal reports per PD claim for insured
employers. These data are for claims valued at 28 months after the beginning of the
accident year (e.g., April 1997 for claims occurring in 1994). While 1994 and 1995 have
lower average claim frequency than earlier years, this appears to be a continuation of a
trend that preceded the 1993 reforms by several years.

Charts 9 and 10 indicate that while there has been little change over the time of the
years covered by the survey (1989-95) in the portion of claims with only one party
requesting a report, either applicant or defense, the decline in the average number of
reports is being driven in major part by the decline in claims where both parties
requested reports. In addition, Chart 10 demonstrates that this trend away from the
dueling docs began in the early 90s and was little affected by the 1993
reforms. Chart 11 shows the same trend for data on the percent of claims with a report
requested by each party, whether or a report was request by another party or an AME report
was involved on the claim.

Finally, these data were used to evaluate the mostly likely area where the impact of
presumption would appear. That area is consistent with the expectation that the number of
claims with no reports requested would increase substantially. If the threshold presented
by presumption in favor of the PTP reduced parties willingness to obtain additional
medical-legal report, this should be apparent through an increase in claims with no
reports. However, Chart 12 shows that the trend in claims with no reports began in 1992
and leveled off in 1994, even though PTP presumption applied only to claims with dates of
injury in 1994 or later.

Chart 13 offers a more detailed look at this trend. Since chart 12 shows a higher level
of no-report claims in 1994 and 1995 than in 1993, the data were broken down by quarter of
injury. If the difference in the portion of no-report claims between 1993 and 1994/95 was
the result of the reform the rather than an underlying trend in the system, we would
expect a jump in the graph between 1993 and 1994. If the cause was an underlying trend
independent of the reforms we would expect the 1993 injury year to exhibit a trend
starting out low in the first quarter and increasing through the fourth quarter to a point
similar to 1994 data. The latter effect is what we observe in these data, suggesting that
the presumption given to the treating physician had little apparent effect on the
frequency and consequently the total cost of medical-legal reports.

The data from the WCIRB PD Claims Survey give no indication that the increased role of
the treating physician, particular the presumption granted to the findings of the PTP, has
reduced the cost of medical-legal reports. Given that the PTP reports appear to be of
poorer quality than those of forensic doctors, the preliminary findings suggest that the
presumption granted the treating physician should be discontinued.

The Commission on Health and Safety and Workers Compensation recently
participated in a series of meetings for Workers Compensation Judges (WCJs). A portion of
each of these meetings involve a discussion of litigation surrounding the issue of
presumption. The WCJs raised a number of concerns about the impact of presumption on the
litigation process. They indicated that presumption had increased the level of litigation
within the system for two reasons. First, there was substantial litigation over
presumption, for example who was the PTP, attempts to rebut presumption, and the scope of
presumption. Attachment 2 includes a summary of major cases brought before the Appeals
Board dealing with the issue of presumption.

Second, the judges felt that litigation was increased because the party without
presumption felt required to litigate over numerous other issues as its only recourse for
being able to motivate a compromise agreement with the party that controlled presumption.
Finally, the WCJs were concerned that the impact of presumption was to limit the range of
judicial discretion when crafting decisions based on the range of medical evidence.

For these reasons, the judges were nearly unanimous in their opposition to the
retaining the current standard as defined in 4062.9. Comments on the earlier draft of this
report included two recommendations that appear to be consistent with the comments of WCJs
at these sessions. One comment recommended language similar to that found in Amos v.
Director, Office of Workers Compensation, US Court of Appeals, Ninth District,
No. 96-70988.

In this case (under Longshore and Harbor Workers Compensation Act) the court
found

"Where an injured employee seeks benefits under the LHWCA, a
treating physicians opinion is entitled to special weight. As we have explained in
the context of Social Security cases, "we afford greater weight to a treating
physicians opinion because he is employed to cure and has a greater
opportunity to know and observe the patient as an individual." [Magallanes v.
Bowen quoting Sprague v. Bowen] The same logic applies in cases involving industrial
injuries.

Another comment on the draft offered the following wording.

"[T]he opinion of the treating doctor is entitled to great weight,
giving consideration to the doctors treatment, the opportunities the doctor has had
to observe and evaluate the patient, and the accuracy and consistency of the history of
injury and of the residual disability deriving therefrom."

Either of these or some similar standard for treating physician reports may be
preferable to the current wording of LC 4062.9 in the absence of evidence that the
presumption accorded treating physician is accomplishing important public policy
objectives.

Information is adequate and is consistent with Packard Thurber/Guidelines

___ ___ ___ 29. PERMANENT AND STATIONARY

P and S determination is made. In general, the
physician should give a permanent rating for someone who is P & S only. One exception
to this rule: IW who has a progressive disease. In this case a tentative rating can be
given. The physician may speculate that the IW will be 100% disabled in the future or can
state that the IW needs to be examined again in the future. Another exemption is when the
IW refuses treatment.

___ ___ ___ 30. OBJECTIVE FACTORS

Comparative measurements or percent loss of active motion is noted as required in
Packard Thurber/Guidelines.

___ ___ ___ 31. SUBJECTIVE FACTORS (If no, check areas of inadequacy)

Should specify degree and frequency/use the words of art correctly.

___ Frequency __ Severity

___ words of art used incorrectly

___ ___ ___ 32. WORK RESTRICTIONS

Report contains work restriction which are consistent with the rest of the report
and with the loss of pre-injury capacity. Work restrictions should apply to open job
market, not for the present job or Report does not confuse the need for work restrictions
with the need for vocational rehabilitation.

___ Work restrictions given in pounds and prior ability in pounds given

If No check areas of inadequacy:

___WC guidelines used incorrectly

___Work restrictions do not consider open labor market

___Work restrictions given in pounds and prior ability in pounds not given

___Work restriction(s) inconsistent with voc rehab limitations

___Other

Present?

___ ___ 33. REASONS FOR OPINIONS ON DISABILITY STATUS

Yes No Report must contain explanations or listing of reasons supporting the
conclusions/opinions as to the level of the disability.

___ ___ 35. APPORTIONMENT

Yes No Report has physicians opinion or apportionment, if applicable.
Apportioned to disability not to impairment or for causation. Must have valid reasons for
apportionment. Report can mention normal progress of underlying disease.

___ ___ __ 38. RATABLE WITHOUT QUALIFICATIONS

Yes No NA The rater was able to rate the report
and was not compelled to qualify the rating due to inconsistent or incomplete data.

Judge Correio has prepared summaries of these cases as part of numerous presentations
before groups involved in workers compensation litigation and training sessions for
other judges. The Commission appreciates Judge Correios offer to include this
information in the current report.